Eastern Europe: Region Benefits From Emissions Trading

The idea of buying and selling the right to pollute the air is a central plank of international environmental protocols. Its purpose is to make cutting pollution a paying proposition. Eastern Europe is already benefiting, as Western countries that have difficulty reducing pollution at home are getting credit for helping the East. Correspondent Breffni O'Rourke reports.

Prague, 6 April 2000 (RFE/RL) -- The Kyoto process for reducing the world output of greenhouse gases -- the gases blamed for warming of the Earth's atmosphere -- is lumbering slowly forward.

The process should take on more definition this November when an international conference in The Hague will work to set practical rules for achieving the air pollution cuts already agreed on by the world community, at a 1997 conference in Kyoto, Japan.

As agreed at Kyoto and follow-up meetings, world emissions of six greenhouse gases are to be cut by 5 percent below 1990 levels by 2012. That's a figure much lower than environmentalists originally hoped for, but it's bigger than it appears because, since 1990, such emissions have continued to rise. As different countries pollute at different rates, each country has its own target to meet.

For example, the Netherlands is committed under Kyoto to cut its emissions by 6 percent below 1990 levels, but because good economic growth has led to production of more emissions, the actual cut will be some 26 percent of today's pollutants.

The difficulty of reaching such targets is causing the Netherlands, Sweden, and some other highly industrialized European Union countries to look elsewhere for help. They are looking to the less developed, yet highly polluted, countries of Central and Eastern Europe.

That's because of the Kyoto protocols that allow what's called emissions trading. Under Kyoto, air pollution can be traded like any other commodity. In other words, if one country is emitting less pollution than it is allowed, it can "sell" that extra capacity to a country that is emitting more gases than allowed, so that both sides conform with Kyoto commitments.

Within that broad concept, there's a variation called the Joint Implementation Mechanism, which experts say exactly fits the development needs of transition countries. Under that mechanism, an EU country can build a new, low-pollution power plant in Eastern Europe and thereby obtain for itself a "credit" for the amount of emissions by which the new plant cuts pollution.

"The technology used in these [transition] countries in the past could easily be replaced by better technologies with lower emissions. There is, therefore, a huge potential to lower emissions in those [Central and East European] countries."

Although emissions trading does not formally become operational until 2008, countries like the Netherlands are already planning to use it to help them meet their targets. A senior official with the Dutch Economics Ministry, Mauritz Henkemans, says his country plans to meet half its commitment by cutting its own emissions and half by trading with the east.

Henkemans says a preliminary, exploratory program is under way covering 41 small projects designed to reduce carbon dioxide in nine transition countries, including Bulgaria, Romania, Slovakia, Ukraine, and Russia:

"The idea behind joint limitation is that because the costs in the Netherlands are very high to bring down CO2, and in Eastern Europe it is cheaper to reduce CO2 and realize energy savings, that's why we think it is more effective to do it in the [Eastern] countries, and of course they have the advantage of getting investments and new technology in all these areas."

A typical project in an East European country could involve replacing an old, inefficient coal-fired district heating boiler with a new gas boiler, and also hooking that new boiler to electricity production, giving an increased energy efficiency of about 50 percent.

In May, the Netherlands plans to expand the pilot scheme and put it on a more businesslike footing, allowing companies in the East European countries to put forward their own proposals for cooperation.

Sweden, too, is very active in preparing the groundwork for emissions trading. It has some 70 pilot projects, mostly in the Baltic states Estonia, Latvia and Lithuania, but also in Russia and Poland. Industry Ministry official Olle Bjoerk says the projects help giver and receiver alike:

"First of all, we want to explore the possibility of using joint implementation as a measure in our [Swedish] climate policy, and also, from the very beginning we saw that this [cutting pollution] was a very urgent part of our general assistance to these countries when they turned independent."
On a broader front, the European Union last month issued a paper outlining proposals to create an EU-wide emissions trading system, at least in one key greenhouse gas, carbon dioxide.

Peter Vis is a senior official at the EU's executive European Commission in Brussels. He says the Kyoto mechanism could help spur the replacement of aging and potentially unsafe nuclear power stations in the east with clean new conventional plants:

"We have to start thinking now as to what generation capacity can be taking over from the nuclear plants that are being retired. Clearly it is something that must be planned over a longer time scale, given the time it takes between conception and coming on stream, so there is no reason why [joint implementation] projects cannot be being envisaged as of now, and even for instance a power generation facility could come into use from say 2005 or 2006."

Any such project would then formally start earning emission credits for the builders -- whether they be private or governmental -- from 2008.